Obama’s leadership failure

The “fiscal cliff” is a massive failure of presidential leadership. The tedious and technical negotiations are but a subplot in a larger drama. Government can no longer fulfill all the promises it has made to various constituencies. Some promises will be reduced or disavowed. Which ones? Why? Only the president can pose these questions in a way that starts a national conversation over the choices to be made, but doing so requires the president to tell people things they don’t want to hear. That’s his job: to help Americans face unavoidable, if unpleasant, realities. Barack Obama has refused to play this role.

Instead, he has cast the long-term budget problem as a question of whether the richest 1 percent or 2 percent of the population should pay more in taxes. Not only that, but he has insisted that the higher taxes be paid by raising rates, as opposed to reducing various tax breaks (deductions, exemptions, preferential rates) enjoyed heavily by upscale Americans. The obsession with rates is bad policy (higher rates may threaten risk-taking, work effort and hiring) but qualifies as good politics: It signals Obama is macho; he’s tough on the rich, who are implicitly blamed for the nation’s budget and economic woes.

Whatever one thinks about raising taxes at the top (and I have no objection to it as part of comprehensive budget package), it’s not the crux of the problem. The crux of our problem — the problem being the bipartisan and untenable promises made to most Americans of both high government benefits and low taxes — arises from an aging population and high health costs, which cause rapid increases in spending on Social Security, Medicare and Medicaid.

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Until Obama conspicuously and consistently acknowledges these realities in straightforward and unmistakable language — something he hasn’t done and shows no signs of doing — he cannot be said to be dealing honestly with the budget or with the American people. The main reason that we keep having these destructive and inconclusive budget confrontations is not simply that many Republicans have been intransigent on taxes. The larger cause is that Obama refuses to concede that Social Security, Medicare and Medicaid are driving future spending and deficits. So when Republicans make concessions on taxes (as they have), they get little in return. Naturally, this poisons the negotiating climate.

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Unfortunately, much of the media have accepted the Obama narrative that it’s only Republican rigidity that frustrates negotiations and leads to deadlock. This means, of course, that there’s even less incentive for Obama and congressional Democrats to engage in genuine bargaining.

The result is that we’re not getting the debate we deserve and that budget choices are being made mainly by default. Just as important, the periodic, ugly confrontations over budget policy — the paralysis and bitterness they involve — corrode confidence and weaken the economy. A weak economy creates few new jobs, and the lack of jobs is the nation’s No. 1 social problem. Obama’s abdication of responsibility may be in his political self-interest, but it is profoundly hostile to the national interest.

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19 Responses to “Obama’s leadership failure”

Scott in Oklahoma

One of the things the dem’s are trying to slide in is an increase in the inheritance tax. Let’s think about this a minute… a ranch out here that has been in a family for well over a hundred years, maybe a thousand acres of grass and wheat, some cattle. The ranch family makes a living, but they ain’t rich by any stretch of the imagination. The matriarch of the family passes away, she was in her 80’s, her grandparents homesteaded the place. Now, to pay the taxes on their inheritence (property valued over $1M), they have to sell off the family ranch, or a good portion of it; now it isn’t big enough to grow enough cattle or wheat to live on.
I don’t have a dog in this hunt, the property I own is small and nobody in my family will ever have a million to leave anyone. But I am absolutely opposed to that increase as i am a strong supporter of local family agriculture businesses. The media is glossing right over this (duh), it sure will change the family farms and ranches, for the worse. I sure ain’t likin’ the government…

retire05

I believe the limit is $5 million on inheritance taxes. But I could be wrong. But it doesn’t matter because any rancher/farmer with a fair amount of land that provides even a lower middle class income has a net worth of $5 million when you add land, which continues to increase in value, outbuildings, farm equipment, etc. Not to mention that inheritance taxes are double taxation; you paid taxes on the money you earned which bought the farm equipment in the first place and then the government will tax you on what you have when you are dead.

Scott in Oklahoma

@retire05: I think I heard they wanted to drop it to a million… we won’t know until the bill is passed, right? In any case, it doesn’t matter how much, it’s too much. As you said, double taxation, and as I said, fewer family farms/ranches (gee, small businesses, imagine that).

ilovebeeswarzone

yes on top of the sadness of losing a member of the family, they have to pay for its death
unfair to the max, that elder began the treasure he is leaving, by working hard at it
as it is most of the time,

oops I JUST HEARD NO DEAL, IT WAS, IT IS NOT NOW FROM JOE BIDEN’S MOUTH

Bette

There is truth in Samuelson’s article, a lot of truth. He did neglect one thing; the corporations are big beneficiaries of government special interest deals and so they promote Obama’s bad economic agenda, because it helps them. The little guy actually believes that Warren Buffet is on their side; what a joke, but the joke is on the little guy.

Khiri

Who cares how you made your money, whether it’s in farming or made from selling Pet Rocks and Pop Rocks? It’s your money and it’s up to you who should inherit it when you die. This arrogant decision stems from the government’s belief that all money is theirs and THEY will decide if we peons can have any of it. We are being lorded over by the cruel and the clueless.

ilovebeeswarzone

Khiri
yes and if they have to sell part of their land to pay the GOVERNMENT,
who is buying that part, it could easy fall into foreigner hands,
lost to the real rooted AMERICANS
forever, sad, when we think of lands where own by rooted AMERICANS since the many generations,
being fragmented in too small ranches, which cannot have the same quantity of beefs which is needed for the profit of the rancher’s family,
lost to AMERICA’S HERITAGE,
THERE WAS A PROMISES TO FIX THAT LAW,
I GUESS IT WAS ANOTHER ELECTION LIE,
HAPPY NEW YEAR

Nan G

If the Obama/Senate bill with its 41-to-1 in NEW tax hikes-to-OLD spending cuts which passed with 89 votes gets passed also in the House it is the end of the traditional Republican Party.
I only know of Rubio and Rand as Senators who voted NO on it.
The voting or debate starts in a few minutes in the House.
Obama ”fails” at leadership….like a fox.

Bobachek

I’m not convinced this was a failure of leadership by Obama. The man got most everything he wanted while giving up virtually nothing. The failure I see is the voting publics failure to elect true fiscal conservatives to the Senate and Congress. As long as we keep electing the same good ol’ boys to go to DC to take care of nobody other than their own interest in making politics a career, we will continue to get what we have right now.

Greg

The reason for inheritance taxes is to prevent the emergence and dominance of a ruling hereditary aristocracy. I’m not sure what alternate mechanisms there might be–other than periodic peasant revolts, which tend to become very unpleasant for all concerned.

Scott in Oklahoma

@Greg: First, lemme say I was mistaken, they are drawing the line at $5M. That said, I would argue your reasoning Greg. I think those taxes were passed because the greedy shitheads in Congress saw it as a revenue stream they could put hands on without a lot of effort. And who is going to listen to complaints of a few little farmers and ranchers anyway, they don’t have any clout in DC. And the Monsanto’s and other big corporations that have the huge farms have an excellent opportunity to buy more proven farm an ranch land; I can see where they might lobby for some of that.

ilovebeeswarzone

GREG
SO WHAT IF IT’S PASS ON TO HEREDITY, THAT IS WHAT IT WAS ALL ABOUT WHEN THE TOP ELDER STARTED THE FARM OR THE RANCH OR THE BUSYNESS,
do you think the work they have done to start those endevour was to give it to GOVERNMENT?
DO YOU THINK THEY DON’T HAVE THE LOVE FOR THEIR CHILDREN WHEN START A SMALL TO BECOME A BIG SUCCESS, AND MOST OF THE TIME THE YOUNG HAD HELP THEM TO GROW THE BUSYNESS, YOU HAVE THE DEMOCRATS MENTALITY THAT THEY OWN THE USA, LAND AND TREASURE,
AND LATELY THEY ARE THINKING OF SELLING THE FEDERAL LANDS AND TRAIN AND OTHER ,
THEY WOULD SELL IT TO MUSLIM WITHOUT A CARE, I THINK THEY ALREADY DID THAT WITH THE BIG MOSQUE TAKING LOTS OF LAND, WHILE SOME AMERICANS ARE HOMELESS AND SLEEP ON THE STREET, AND BEING DRIVEN AWAY IF THEY LAND AROUND A MOSQUE,
WTF DO YOU CARE ABOUT THE RICH ELDER WHO DIE, LEAVING TO HIS HEREDITY TO
KEEP THE SUCCESS IN THE FAMILY THAT’S WHAT IT SHOULD BE,
YOUR MIND IS OF A COMMUNIST SOCIALIST DESTRUCTIVE MINDSET FOR AMERICA,
LIKE THE DEMOCRATES, NOW TRYING TO GET THE VOTES FOR THE PEOPLE TO PAY FOR THEIR SPENDING SPREES NOW CHOKING THEM, THEY ARE TO BLAME FOR IT ALL,
AND TRY TO LAY THE BLAME TO REPUBLICANS THE GOP AND THE TEAPARTY,
SHAME ON THEM TO COVER THEIR LEADERSHIP, UNABLE TO FUNCTION,AND RUINING THE STATES,
HEREDITY IS THOSE RIGHTFULLY IN LINE TO HERIT WITHOUT BEING PUNISH WITH THOSE PENALTY, THE HERITAGE BELONG TO THEM ONLY.
THIS IS THE MOST IMPORTANT TIME TO SETTLE IT WHEN YOU HAVE THIS KIND OF ENTITELMENT OF MULTIPLE FACES CRASHING ON THE PEOPLE’S BACK, THOSE WHO SWEAT
TO INHERIT THE GENERATION FIRST ELDER’S HARD WORK.
THAT BESIDE THE MILLIONS OF ILLEGALS COMING IN OPEN BORDER AND GIVEN PARDON BY OBAMA FOR HAVING CRIMINALY CROSS IN THE STATES,
WHILE MILLIONS OF PEOPLE WITH OLD PAID FOR LIGHT FELONY
CANNOT FIND A JOB IN THEIR OWN COUNTRY,
SHAME ON THOSE GUILTY OF LETTING THEM DOWN AND REPLACING THEM BY ILLEGALS,

Greg

I worry that if inherited wealth were allowed to accumulate without any moderating mechanisms or limits for a few of generations, the nation would wind up with a far worse concentration of wealth at the top than we presently have, along with markedly less opportunities for everyone else. Since growing wealth in our society increasingly correlates with growing political power, a seriously dysfunctional distribution of the nation’s wealth could easily become a permanent feature. I don’t like the apparent drift of the nation toward a have and have-not society, essentially consisting of the very rich, a diminished middle class consisting of those of direct use to the very rich, and corporate serfs.

I don’t oppose totally eliminating inheritance taxes on amounts below some set threshold, and it wouldn’t bother me if that threshold were set at several millions. Nor would I oppose special provisions that would allow even greater amounts to be passed on without inheritance taxes, in the case of assets that are part of the operation of a family farm or business.

ilovebeeswarzone

GREG
DON’T WORRY , OBAMA MAKE SURE THAT NOBODY GET RICH TO THAT POINT
EXCEPT HIMSELF GREED TO NEED MONEY ALL THE TIME,
THE RICHES PROVIDE JOBS FOR MANY IN ALL SCALE OF SOCIETY,
AND with this government they need someone to take their side, because they have been so demonize by
OBAMA SINCE HE TOOK POWER,

Scott in Oklahoma

@Greg: So you believe in redistribution of wealth Greg? Where do you draw the line? I was watching a series on Animal Planet about some ranchers in Montana. There are some huge ranches, the land alone is worth millions and been in the family for generations. They will be penalized. The very few, very rich, seem pretty responsible withtheir money, and so do their children. They should be penalized for success?
Here’s one of the huge differences between conservatives like me and liberals like you, I don’t begrudge anyone’s success, nor do I believe in penalizing for that success. Liberals, on the other hand, seem to think it’s okay to beat up the wealthy for their successes; it’s easier to just take from them than it is to go bust ass and make a success out your efforts. I know and have known a lot of people, a lot of successful business owners and a few really wealthy folks, none of them are liberals. There’s gotta be a reason for that. And I am comfortable with being a middle aged, middle class blue collar hard working guy, I own all I have, pay my own way and sleep with a clear conscience.

Greg

Not entirely. I object to the rigged game we’ve seen at work over the past couple of decades, that has favored a rapid redistribution of wealth toward the top.

Why should the middle and working classes have experienced stagnating—if not actually declining—real wages, a significant reduction in their average net worth, the loss of job security, the elimination of employee pensions, a reduction in most other employment-related benefits, and growing insecurity about the future of Social Security and Medicare, over the same period of time when the GDP and the total national wealth has greatly expanded?

Do people think this is all just something that someone has made up?

I don’t know where this “beating up the rich” perception comes from. The rich have been paying some of the lowest tax rates since the 1950s for over a decade now. Even Ronald Reagan never proposed high end federal tax rates so low as they are at present; he actually found the idea of lower tax rates on investment income than on wages objectionable.

I prefer a system that creates a thousand millionaires to one that creates a billionaire. I’d rather have a town full of dozens small retail businesses that a town with one Walmart. It that just me?

Scott in Oklahoma

@Greg: Good morning Greg. The stagnation and decline began in january 2007, just about the same time Congress was taken over by the democrats. Yeah, George Bush was President, and outnumbered. He fought against the housing bubble and was rebuffed by the corrupt Sen. Rangel and company. He approached Congress with a really decent plan to save Social Security, which was rebuffed. He did a lot of things I didn’t much care for, but he had the good of the nation in his heart and mind. The democrats, not so much. And I don’t know where you’re getting positive GDP numbers from, we haven’t seen growth in over 4 years. Businesses are stting on their money instead of spending to grow, they don’t know what this president and this congress is going to do next. They do know this president is anti business, and leads his administration against business. Obama talks like he supports business and industry, but watch his actions, and the actions of his subordinates.
I have heard your president say he wanted to punish the rich… that’s where “beating up the rich” comes from. They already pay the vast majority of taxes, if you took 100% of the income from the top 10% of the wealthy, you couldn’t run the government for a month, much less pay down the interest on the debt. Wouldn’t it be better if the government encourgaed growth and expansion? Look at the way businesses have responded to the increase in taxes in California and New York… they left for business friendly states like Texas and Oklahoma. Ronald Reagan raised taxes for one year, maybe two, before he dropped them back and saw a positive response from the reduction.
As for WalMart, and Mom and Pop businesses, you and I agree. I personally don’t shop at WalMart unless I don’t have a choice, I prefer to spend my money locally when I can.